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Saving Money For College - Basic Tips

I am sure that every parent would agree, they would rather have their child select a college based on which one offers the best education rather than the one that offers the best financial aid package. The route to making that choice possible is a good savings plan.

There are a number of federal tax breaks available to people saving for college and paying for college. The two best tax efficient savings plans are: Qualified Tuition Programs (529 plans) and Coverdell Education Savings Accounts. The money in these plans will grow tax deferred and the money can be used tax free when it is for college costs.

Once you have picked the best place to save money for college, the most important thing you can do is to start saving as soon as possible. The sooner you start saving the longer the money has to earn interest, or growth.

Some top tips on how to save money for college are:

• Save regularly. If you put a percentage of your pay check away every pay day then it will become a habit and you will not miss the money.
• When you get a bonus, a tax refund or an unexpected windfall save a percentage of that into college savings as soon as you get it (before you’ve spent the money!)
• Ask family not to give expensive Christmas and birthday presents – instead ask them to give a small token present, and a donation to the college fund.
• Involve your child in the process. Show them how much money has been saved and encourage them to contribute their own money to the pot – for example from allowance or baby sitting money. An excellent way to motivate them is to match their savings with a contribution of your own.
 

The most important thing is to actually put the money aside and save.